Colorado legislators are proposing to eliminate “swipe fees” on sales taxes, a move that proponents say would save businesses tens of thousands of dollars a year but which will likely revive counter-arguments that those fees help create a stable and environment for financial transactions.

Also known as interchange fees, swipe fees refer to the 2% to 3% that credit card companies charge retailers every time a customer swipes a credit card to make a purchase, according to convenience.org.

Senate Bill 26-134 would remove the swipe fee on sales taxes.

In a statement Wednesday, the Colorado Restaurant Association said a recent survey of its members found that restaurants pay, on average, about $167,500 per year in swipe fees. Removing the swipe fees on sales taxes will save a restaurant about $26,000 per year.

That amount could make the difference between staying open or shuttering their doors, the restaurant association said.

It’s not the first time that legislators have tackled the issue of “swipe fees.”

Last year, lawmakers pushed for legislation that would have limited how a credit card company could set fees, including a ban on “collusion” among credit card companies in setting fees.

It would have changed how swipe fees apply to taxes and tips, affecting other credit card network practices. It would have made changes in the area of data use, merchant acceptance, charitable donations and dispute protections.

The 2025 bill omitted the nation’s largest banks, such as Chase and Wells Fargo.

The banking industry has warily eyed proposed policy changes to swipe fees.

In an opinion piece published by Colorado Politics last month, Brett Wyss, chair of the Colorado Bankers Association, said revenue from interchange fees “helps make electronic payments both convenient and trustworthy.”

“It funds consumer services, such as fraud monitoring, cybersecurity, dispute resolution and the infrastructure that allows transactions to clear instantly and securely,” he wrote. “Interchange fees support free and low-cost checking accounts, debit cards and credit access that millions of Americans rely on.”

Wyss, who is also the president and CEO of Colorado Springs-based Integrity Bank & Trust, said those protections are “largely invisible to consumers.”

“People tap or swipe without worrying whether their payment will go through, whether their data will be stolen, or whether fraudulent charges will be reimbursed. This peace of mind encourages spending and keeps our modern economy moving. Interchange fees are the cost for that security,” he said.

Sen. William Lindstedt, D-Broomfield, who sponsored last year’s bill, is also pushing for the 2026 version, along with Sen. Iman Jodeh, D-Aurora. In the House, the bill will have the backing of leadership, with House Speaker Julie McCluskie, D-Dillon, and House Majority Leader Rep. Monica Duran, D-Wheat Ridge, as its prime sponsors.

During the 2025 special session, lawmakers passed a bill to eliminate the state sales tax on vendor fees — the fee retailers are allowed to retain when they collect and remit state sales tax. Lindstedt said the agreement at that time was to go back to the swipe fees issue and come up with a simpler approach.

This year’s version only applies to banks that issue credit cards with at least $60 billion in assets, which cover the largest banks in the country that control about 80% of credit cards, according to Lindstedt.

That’s a big difference from the 2025 bill, which would have affected banks and credit unions, regardless of size.

Colorado is not the only state eyeing the changes.

Illinois passed a law in 2024 that would ban swipe fees on state and local sales tax and tips that was immediately challenged by banks and credit unions. A judge issued a preliminary injunction a year ago for the banks but not for the credit unions.

Last month, a federal court judge ruled in favor of the Illinois law, which could allow it to go into effect later this year. Banks and credit unions said they intend to appeal.

The 2026 bill has drawn support from groups ranging from Towards Justice to the Colorado chapter of the National Federation of Independent Business to the Bell Policy Center. The restaurant and retailer associations, booksellers and craft breweries also support the measure.